AirAsia X's debt-restructuring proposal received more than 90% support from creditors in an electronic vote ahead of meetings Friday Image Credit: REUTERS

Kuala Lumpur: AirAsia X Bhd.’s debt-restructuring proposal received more than 90 per cent support from creditors in an electronic vote ahead of meetings Friday, according to a person familiar with the matter, as the debt-laden budget carrier tries to stay afloat.

The three different classes of creditors, which include Airbus SE, BOC Aviation Ltd. and Rolls-Royce Holdings Plc, have voted in favor of the Malaysian long-haul airline’s proposed debt restructuring, said the person, who asked not to be identified because the information isn’t public. AirAsia X needs at least 75 per cent support from each class of creditors to proceed with its plan.

As part of the deal, Airbus has also agreed to significantly reduce AirAsia X’s existing aircraft orders, the person said, without providing details. The airline is the world’s biggest customer for the wide-body A330neo, with 78 aircraft on order, according to the French planemaker’s website. It also has an order for 30 narrow-body A321neos.

A representative for AirAsia X didn’t immediately respond to a request for comment. A spokesperson for Airbus said the company was unable to comment on an ongoing restructuring process.

AirAsia X, part of AirAsia Group Bhd., Southeast Asia’s second-biggest low-cost carrier, embarked on the restructuring last year as Covid-19 wiped out travel demand and thousands of planes were grounded globally. With the creditor agreement, which will take its gearing levels to zero, allowing it to start with a clean slate, the carrier is betting its financials will improve as countries in Asia start to reopen borders to travel.

AirAsia X recently offered to pay creditors 0.5 per cent of the more than $8 billion total debt they’re owed and terminate all existing contracts. That would help the airline avoid a delisting from the Malaysian stock exchange after it was officially categorized as a financially distressed company.

AirAsia X was declared financially distressed late last month after its auditor Ernst & Young issued a disclaimer of opinion about its financial results for the 18-month period ended June. The accounting firm cited threats that cast “significant doubt” on AirAsia X continuing as a going concern. AirAsia X said it has a year to recast its finances.

The airline was already struggling before the pandemic, posting losses for six out of the seven quarters through December 2019. It reported a net loss of 24.6 billion ringgit ($5.9 billion) for the three months ended June 30, with sales of 72.3 million ringgit.